Answer:
Instructions are below.
Explanation:
Giving the following information:
Fixed costs= $109,000
Unit variable cost= $21
Selling price= $85.
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 109,000/ (85 - 21)
Break-even point in units= 1,703 units
Now, we need to include the desired profit:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (109,000 + 150,000) / 64
Break-even point in units= 4047 units
Sales= 500,000
Variable cost= 5,882*21= (123,522)
Contribution margin= 376,478
Fixed costs= (109,000)
Net operating income= $267,478
